With China's stock market near a three-year low and its economic growth projected to worsen on a weak property market, it might not seem like a good time to build a new casino in Macau.
But Las Vegas Sands (LVS) is going ahead with a new Macau casino on a plot called Parcel 3.
The casino is slated to be Sands' biggest project in China since it opened its $4 billion Sands Cotai casino in the spring.
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Sands on Monday reported the local government in Macau extended the deadline for completion of Parcel 3 by three years, to April 2016, for an unspecified penalty. The company has reportedly already spent nearly $97 million on construction and land costs at the site. Macau is China's special gaming region and the only place in the country where casino gambling is legal.
Las Vegas casinos can't count on growth at home, as U.S. economic growth remains feeble, unemployment holds above 8%, and expected growth from online gaming hasn't yet kicked in.
The Commerce Department provided fresh evidence of slowdown Monday, saying retail sales fell 0.5% in June, a third straight month of declines. Analysts were expecting a slight gain.
The drop was across a wide spectrum of industries, Commerce said, from consumer electronics to autos to building supplies.Sands, MGM Resorts (MGM) and Wynn Resorts (WYNN), the big three Vegas casinos, have all bet heavily on Macau, building large casinos in the world's fastest-growing gambling destination.
But payouts from Macau haven't made up for global economic weakness and, with China's economy in retreat, casino stocks are at 2012 lows. The Leisure-Gaming/Equipment group is ranked a lackluster 141 of the 197 industry groups IBD tracks.
Sands slid about 0.4% to 39.40 in afternoon trading Monday.
MGM climbed 0.7% and Wynn rose 0.5%.
Some gaming equipment makers are doing well. Shuffle Master (SHFL), which makes card shufflers and table games for casinos, dropped 2 cents to 15.24. But shares have trended higher in recent weeks. The company has an 89 Composite Rating, meaning its shares have outperformed 89% of all stocks.
Multimedia Games (MGAM), a maker of online gaming systems, terminals and other gaming products, mainly for American Indian casinos, slid 1.1% Monday afternoon. Multimedia sports a Composite Rating of 92. Last week the stock hit its best level since late 2004.
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